Friday's Most Important Event: Jay Powell Testimony

Friday, February 23, 2018

On a day in which we see fewer companies reporting quarterly earnings and no important economic data to speak of, we look forward to what might potentially affect the market this Friday. And we found it: at 11am ET today, new Fed Chair Jerome “Jay” Powell will report to Congress on the Federal Reserve’s Monetary Policy.

This is significant because we are seeing something of a sea-change in the U.S. economy currently: long-standing accommodative measures to spur growth and full employment have finally taken hold over the past year, and show no signs of slowing down. On top of this is a $1.5 trillion tax cut for corporations and many individuals that promises to bring huge new influxes of cash that would have normally gone to paying taxes.

Also, proposals for new infrastructure funding in Congress are being considered. Powell’s testimony ought to be informative to congresspeople deciding on economic policy going forward.

The testimony will not be televised live; instead, we’ll see segments of it on Monday. But today is the day the Fed Chair lays plain what he thinks is in store in the current market environment, which has already seen raised levels of volatility amid concerns of excess deficits and rising inflation. Powell’s words may soothe or aggravate these concerns, especially including his opinions regarding interest rate hikes this year.

General Mills Goes Blue

Pet food specialty retailer Blue Buffalo (NASDAQ:BUFF) has agreed to be acquired by food product giant General Mills (NYSE:GIS) for $40 per share, or $8 billion in cash. General Mills expects the company to immediately add to the company’s top-line, with bottom-line growth expected in 2019. The U.S. pet food market is a $30 billion industry, growing routinely in the 3-4% range each year. BUFF shares cranked up 17% upon the news release.

Market futures are up today following a mixed Thursday in regular trading. This February remains on track to be the worst trading month in more than two years. Both the Dow and S&P 500 are roughly 6% off all-time highs we saw last month, where the Nasdaq is down 4% from those highs. Without much pushing or pulling the market in either direction, we do not foresee a particularly volatile trading day. Happy Friday!

Mark Vickery
Senior Editor

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